Join the author of “The Wallet Allocation Rule” as he dives into the research and analytics behind winning more share of wallet. In this session, Luke Williams explores the wallet allocation rule, and how changing methods or measurement and analysis, to more actively predict change, can be a sustainable competitive advantage.

1. Winning the Battle for
Share of Wallet: Turning
New Customer
Satisfaction Metrics into
Financial Gain
Luke Williams
Vice President @ AECOM, Researcher, Author

2. 2
Housekeeping
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3. Luke Williams
VP @ AECOM, Researcher, Author
NY Times Bestselling Author of The Wallet Allocation Rule:
Winning the Battle for Share
Nielsen Bookscan Bestselling Author of Why Loyalty Matters
Currently: Vice President, Client Measurement and Analytics,
AECOM
Formerly: Head of Research Methods & Consulting, Ipsos
Loyalty US
Initially: Younger, much more handsome

4. “The aim of marketing is to
know and understand the customer so well the
product or service fits him and sells itself.”
Peter Drucker
Writer, Professor, and Management Consultant
Drucker, Peter (1973), Management: Tasks, Responsibilities, Practices. New York: Harper & Row Publishers, pp. 64-65.

5. Every CEO is Chasing Growth

6. The Next Competitive Battleground
89% of companies plan to
compete primarily on the basis
of the customer experience by
2016!
McLellan, Laura (2014), “10 Proof Points – Why Customer Experience Is the Next Big Thing,” http://blogs.gartner.com/laura-
mclellan/10-proof-points-why-customer-experience-is-the-next-big-thing/

7. Your Satisfaction Guaranteed!

8. Bloomberg Businessweek: Worse is Better!
Chemi, E. (2013), “Proof That It Pays to Be America’s Most-Hated Companies,” Bloomberg Businessweek, December 17.

9. Purchase
Intention
Satisfaction Recommend Intention
(Net Promoter classifications)
Detractor Passive Promoter
Overall Satisfaction Net Promoter classifications Purchase Intention
Timothy L. Keiningham, Bruce Cooil, Lerzan Aksoy, Tor Wallin Andreassen, and Jay Weiner (2007), “The Value of Different
Customer Satisfaction and Loyalty Metrics in Predicting Customer Retention, Recommendation and Share of Wallet,” Managing
Service Quality, vol. 17, no. 4, 361-384. (Winner of the Outstanding Paper (Best Paper) Award)
Scatter diagram showing a customer’s share of wallet (Y Axis) by his/her satisfaction/net promoter/purchase intention level (X Axis)
R2 < .05R2 < .05 R2 < .08
Traditional Metrics Don’t Explain Share

10. It’s Easy to Prove
A B C
1 Customer ID Satisfaction
Share of
Wallet
2 1 9 30%
3 2 8 60%
4 3 7 15%
5 4 9 75%
998 997 10 35%
999 998 9 45%
1000 999 8 25%
1001 1000 8 50%
1002 R-square 1.13%

11. The Biggest Company on Earth

12. Walmart Shined During the Recession
0%
5%
10%
15%
5%
10%
15%
Oct08
Jul08
Apr08
Jan08
Oct07
Jul07
Apr07
Jan07
Oct06
Jul06
Apr06
Jan06
Oct05
Jul05
Recession
Target
Walmart
Walmart & Target Year Over Year Change in Same Store Sales

13. Walmart: Project Impact
Walmart is in the beginning stages of a massive
store and strategy remodeling effort, which it has
dubbed Project Impact. One goal of Project Impact
is cleaner, less cluttered stores that will improve
the shopping experience. Another is friendlier
customer service.

14. Walmart: Project Impact
Simon, William, EVP and Chief Operating Officer, Walmart U.S. (2010), Wal-Mart Stores, Inc., Presentation at Bank of America Merrill
Lynch Consumer Conference (March 10).

15. Customer Satisfaction Soared
Wal-Mart says Project Impact is driving
consumer satisfaction to an all-time high.

16. But an Historic Same-Store Sales Decline
5%
4%
3%
2%
1%
0%
-1%
-2%
3%
1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/11 4/11 7/11 10/09 1/11
Widespread rollout of Project Impact

17. “They loved the experience. They just
bought less. And that generally is not a good
long-term strategy.”
William S. Simon
President and CEO, Walmart USA
Clifford, Stephanie (2011), “Stuff Piled in the Aisle? It’s There to Get You to Spend More,” New York Times. (April 8), A1.

18. CUSTOMER
UNDERSTANDING
PERFORMANCE
MANAGEMENT
ORGANISATIONAL
ALIGNMENT
What Do You Want to Achieve?

19. Your Score Matters!
Your
Customer
Satisfaction
----
Rank
Your
Brand
Janet Sat. 9
John Sat. 9
Janet & John both provide the same
satisfaction/NPS rating for your brand
ALL firms consider this
a good score

20. Your Rank Matters More!
Different Relative Ranks Result in
Different Share of Wallet
Your
Customer
Satisfaction
----
Rank
Your
Brand
Competitors
Share of
WalletA B
Janet Sat. 9 9 10 25%
Rank 2.5 2.5 1
John Sat. 9 7 8 50%
Rank 1 3 2
Tied

21. The Wallet Allocation Rule Formula
Where:
Rank = the relative position that a customer assigns
to a brand in comparison to other brands
also used by the customer in the category
Number of brands = the total number of brands used in the
category by the customer
Share of Wallet = 1 −
𝑅𝑎𝑛𝑘
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝐵𝑟𝑎𝑛𝑑𝑠
×
2
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝐵𝑟𝑎𝑛𝑑𝑠

22. 80%
100%
80%ShareofWallet
Wallet Allocation
Mobile Phone
0%
60%
0% 60%
ShareofWallet
Wallet Allocation
Drugstores
0%
65%
0% 65%
ShareofWallet
Wallet Allocation
Pharmacies
0%
100%
0% 100%
ShareofWallet
Wallet Allocation
Mass Merchants
0%
100%
0% 100%
ShareofWallet
Wallet Allocation
Retail Banks
0%
60%
0% 60%
ShareofWallet
Wallet Allocation
Asthma Rx
0%
100%
0% 100%
ShareofWallet
Wallet Allocation
Do-It-Yourself
0%
100%
0% 100%
ShareofWallet
Wallet Allocation
Automobiles
20%
50%
20% 50%
ShareofWallet
Wallet Allocation
Office Supplies
0%
80%
0% 80%
ShareofWallet
Wallet Allocation
Airlines
0%
100%
0% 100%
ShareofWallet
Wallet Allocation
Computers
R=.98 R=.99 R=.99
R=.92 R=.91 R=.96 R=.97
R=.78 R=.96 R=.94 R=.67
0%
100%
0% 100%
ShareofWallet
Wallet Allocation
Grocery Stores
R=.93

23. It Doesn’t Matter Which Metric You Use!
Note: Scatter diagrams show the average share of wallet at the firm/brand level (Y-Axis) by the predicted average share of wallet
using the Wallet Allocation Rule (X-Axis).
0%
100%
0% 100%
ShareofWallet
Wallet Allocation
0%
100%
0% 100%
ShareofWallet
Wallet Allocation
0%
100%
0% 100%
ShareofWallet
Wallet Allocation
R=.92R=.92R=.92
Average firm/brand Wallet Allocation Rule score and Share of Wallet across industries investigated.
Purchase IntentionSatisfaction Recommend Intention Net Promoter Score
Recommend Intention
using NPS classifications
0%
100%
0% 100%
ShareofWallet
Wallet Allocation
R=.92
Performance was virtually identical regardless of the metric
used to determine a brand’s relative performance rank

24. “Does this really
make a difference
to my business?”

25. “Yep.”
--Luke Williams

26. What determines a
brand’s rank is different
from what drives
satisfaction!

28. How Value is Defined
$$$
Quantity
PRICE
Value for
Customer
COST
Value for Firm
Q*

29. But I Do Driver Analysis!

30. Drivers Affect Firm Strategy!!
Using Drivers of
Satisfaction
Using Drivers of
Share of Wallet

31. Differentiation/MarketPosition
Driver Strength
Use Share-Based Strategy Grids Instead
Differentiation Opportunity
Significant Improvement
Opportunity
Tapped
Tapped or
Adapt
Unmet
Minimum
Standard
Ownership Opportunity
Wildcard
Window
Dressing

32. Total
Customer
Needs
Gaining share of wallet
requires reducing
customers’ need to use
the competition

34. CHANGE
MEASUREMENT
1. Add A>C>U.
2. Change driver collection.
3. Add barriers and open-ends.
CHANGE
ANALYSIS
1. Add 2 new KPI to your scorecard.
2. Add 1 new driver model to explain SOW.
3. Understand relative driver performance.
How You Achieve Change!

35. RANK
MATTERS
more than the specific
measure or score level and
relative performance is
mandatory for true
understanding
ACTION
MATTERS
and broad enterprise
involvement is the core
of customer centricity
and driving customer
and employee loyalty
How You Communicate Change!

37. Luke Williams
Researcher. Author. Good Guy.
@themethodsman

38. Q&A

39. Thank You!